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JERUSALEM, Jan. 15 -- Israeli Prime Minister Benjamin Netanyahu said on Wednesday that Israel is making stern security demands in the peace talks with the Palestinians, and that it is doing so in order to achieve a peace agreement.

"Israel is conducting a hard and complicated negotiation process in order to achieve the goal of peace," the prime minister said at an event in Jerusalem honoring the fiftieth anniversary of the national security college.

"We don't want a bi-national state, we want a stable peace with our neighbors, but at the same time we don't want to re-enact the disengagement of Israeli forces in order to let hostile elements enter the picture like Iran, as was the case in the Gaza Strip," Netanyahu added, according to a statement by the Prime Minister's Office.

Netanyahu is referring to the August 2005 Israeli disengagement from the Gaza Strip enclave, which was followed in 2006 by the rise to power of the Palestinian Hamas militant party.

The Palestinians strive to establish a Palestinian state according to the two-state solution, the basis of which would be located at the West Bank and east Jerusalem, on lands Israel annexed in the 1967 Mideast War.

A key Palestinian demand in any peace agreement would be land swaps between Israel and the Palestinian government, based on the borders of pre-1967.

Netanyahu in his speech also repeated the Israeli requirements of having the Palestinian Authority acknowledging Israel as a Jewish state and insisting on Israel's right to defend itself.

Netanyahu's speech comes a day after the Yedioth Aharonot Israeli daily reported that Defense Minister Moshe Ya'alon slammed U.S. Secretary of State John Kerry's efforts to push the peace process forward.

Ya'alon was quoted by the daily as calling Kerry "obsessive" and "messianic" and added that "he should just get a Nobel Prize and leave us (Israel) alone."

The harsh comments led to furious responses from the United States and Netanyahu tried to calm the spirits down Tuesday, telling the Knesset (parliament) that the U.S. is Israel's " greatest ally," adding that any disagreements are "always on the heart of the matter, not on the merits of an individual."

Kerry had visited Israel ten times since assuming his post, in order to kick start the peace talks between Israel and the Palestinian after a three year halt. He managed to do so last July.

Kerry continues to closely escort the process and presenting both sides with suggestions and proposals in order to create a framework for the parties to reach an agreement, even as reports mount on both sides that the talks have deteriorated and are in a bad shape.

Despite repeated declarations of the strong alliance between Israel and the United States there have been recent tensions between the countries.

On the issue of the diplomatic contacts with Iran, Israel rejected the United States efforts to reach an interim agreement with Iran, charging Iranian leaders are trying to stall for time instead of stopping their nuclear program, whereas the United States worked hard to end the 30 years of hostility with Teheran.

As for the peace talks with the Palestinians, although the United States did adopt many of Israel's security demands, Israel had infuriated its ally repeatedly over its continuing construction of thousands of housing units in the West Bank and east Jerusalem settlements, despite explicit requests not to do so.